On February 16, 2017, Wisconsin broker Joseph Henry Murphy of B. C. Ziegler and Company and formerly of RBC entered into an AWC settlement with FINRA Regulators.
As identified in FINRA regulatory findings, on February 11, 2015 Murphy exercised discretion in 27 non-discretionary accounts of his customers, placing a total of 80 transactions. In the days leading up to the trades, Murphy had conversations concerning these transactions with his clients and the clients gave the broker express verbal approval for these trades and his proposed strategy, but Murphy did not receive authorization from these customers on the same day that he executed the transactions. This is in violation of FINRA rules that require contemporaneous authorization for trades in non-discretionary accounts.
On October 27, 2015 he then again exercised discretion in 20 non-discretionary accounts, placing a total of 32 trades. Once again, in the days leading up to the trades, Murphy discussed these transactions with the clients and they gave Murphy express verbal approval for these trades and his proposed strategy, but he did not receive authorization from these customers on the same day that he executed the transactions.
On December 22, 2015 Murphy made 11 mutual fund transactions for a single customer after a short telephonic discussion with that customer. In that discussion neither the specific mutual funds nor the specific amounts that would be invested were expressly identified, and Murphy used his discretion to make those transactions. Murphy did not obtain written authorization, which is required for an account to be discretionary, from any of the 48 customers to exercise discretion in their accounts and RBC, the employer of Murphy at the time, did not approve these accounts for discretionary trading.
For these actions, Murphy received a 10-day suspension and a $5000 fine.
A link to the AWC of FINRA is found here.